Give us a fair Budget tax break, pleads Wetherspoon

PUBS groups JD Wetherspoon has repeated its call for a “level playing field” with supermarkets on taxation.

Tim Martin, founder chairman, said despite headwinds including the tax disparity with supermarkets “the company continues to achieve a reasonable outcome in the current

financial year and has a solid platform for future growth”.

Martin said he hoped for some help from Chancellor George Osborne’s Budget next Wednesday in addressing what he claims is chronically uneven competition with supermarkets in the sale of food and drink.

Specifically, he returned to his criticism that supermarkets could subsidise their offers on alcohol because they did not pay VAT on food sales.

“I’d like him to recognise there should be tax equality between pubs and supermarkets on VAT,” Martin said. “What I actually expect is, he’ll ignore that because it’s too complicated, but he’ll keep excise duty on beer flat because he wants the support of the lounge bar over the next 18 months.”

Wetherspoon, whose pubs include The Standing Order in Edinburgh and The Counting House in Glasgow, admitted its newly opened pub on the M40 has not flourished as much as hoped. “We’re not selling much beer there and although we’re selling a lot of food it’s not as much as we’d hoped.

“Frankly, the controversy it attracted has created something of a social stigma which will take some time to wear off,” Martin added.

The company, which has more than 40 Scottish outlets, struck an underlying pre-tax profit of £37.8 million for the six months to 26 January. That was up from £34.8m a year ago.

The group’s same-floorspace sales, stripping out openings currently running at a rate of about 40 a year, rose 5.2 per cent. Food sales continued to set the pace, up 10.5 per cent including strong breakfast sales, while bar turnover increased 3.6 per cent.

Wetherspoon’s fruit and slot machine sales fell 9.5 per cent, while total revenues, including 19 new pubs in the first trading half, were up 9 per cent to £683.2m. Sales are up 6.7 per cent in the first six weeks of Wetherspoon’s second half.

The first-half operating margin fell ten basis points to 8.2 per cent, within its guidance of 8.1 to 8.3 per cent for the year.

This represents a fall from 8.7 per cent in 2012-13 due to investment in IT, staff and training ahead of expansion. The interim dividend is maintained at 4p.

One analyst said: “It is a resilient performance, which we are used to from Wetherspoon.

“The company has never been obsessed by profit margins at the expense of sales, which continue to move forward.”

Wetherspoon is aiming to open between 40 and 50 pubs in the UK this year and will open its first in the Republic of Ireland, as it continues it focus on growing sales over margins.